Welcome

1. Welcome

2. America’s Long Term Acute Care (LTAC) Hospitals Timothy J. Rolsen Chief Executive Officer Regency Hospital Cleveland West Regency Hospital, Akron

3. My background: Prior Work Experience (20 Years) • CEO - LTAC freestanding and HIH • Regional Director – 17 Assisted Living Facilities in Ohio • Regional Vice President – Skilled Nursing Facilities • Licensed Nursing Home Administrator • Former Trustee of Local Community Hospital Educational Background • Master in Business Administration • Bachelor’s Degree in Gerontology with Long Term Care Certificate

4. Agenda What We Believe (Mission and Values) About My Hospital in Cleveland, Ohio. About All LTACH’s (freestanding vs. HIH) Regulatory Guidelines About the Host Hospital in an HIH Symbiotic Relationship with the Host Hospital. Relationship between LTACH and SNF’s Into the future with regulation Q&A

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6. Regency Hospital is part of a large network of more than 120 specialized hospitals owned or operated by Select Medical. 108 of these hospitals are long-term acute carehospitals. The others are medical rehabilitationhospitals.

7. Regency Hospitals are part of Select Medical’s health care system of more than 1,000 locations across the United States.

8. Approx. number of patients Select Medical will treat today in the United States 30,000+

9. That’s 4,000patients in 120+ inpatient hospitals 15,000+patients in nearly 1,000 outpatient centers …and more than 10,000people through our contract therapy sites (mostly skilled nursing homes). All by the end of TODAY.

10. Regency and The Select Medical Way Our Mission Our Values How We Interact With Those We Serve We deliver superior quality in all that we do. We treat others as they would like to be treated. We are results oriented and achieve our objectives. We are team players. We are resourceful in overcoming obstacles. I-CARE Introduce self and role... connect with everyone Communicate what you will be doing Ask/anticipate needs and concerns Respond to requests Exit courteously Select Medical will provide an exceptional patient care experience  that promotes healing and recovery in a compassionate environment.

11. Let’s focus on LTACH’s. What is a Long-Term Acute Care Hospital? 1. We are a small hospital offering specialized care. We operate freestanding hospitals and hospital-within-a-hospital models. 2. Our patients are very sick and medically complex. Many of them are on mechanical ventilators. 3. Many of our patients have Chronic Critically Ill Syndrome. 4. These patients often barely survive ICUs (which stabilize them). For the next step of recovery, they require up to one month or longer of extended hospital care.

12. LTACH Industry Growth • Fastest growing healthcare segment: • 1995 there were 107 LTAC’s • 2005 there were 307 LTAC’s • 2008 there were 450 LTAC’s CMS expenditure increased from: • $700m in 1995 • Approximately $8B in 2012 • Government concerned about rapid growth but shows no interest in savings until recent times of healthcare discussion.

13. Benefits LTAC Provides to STAC Decreases length of stay at STAC Saves costs due to specialization in longer stay patients thus reducing supply costs and increasing efficiency. LTAC monitors quality in this type of patient they serve.

14. Regulatory Guidelines • All LTACHs are restricted to: • - 3 day rule of discharge. • - 10 day rule of discharge. • - over 25 days length of stay for all LTACs (The “Gold Standard”) • Hospital-within-Hospital (HIH) specific • -25% rule, 50% “grandfathered” from host. • - 5% Host readmit rate

15. Regulatory Guidelines HIH Only Admission Rules • Host Admission Rule (referred to as the 534 Rule) – Limits Medicare admissions to 25% to 75% (depending on circumstances) from the Host facility. • Non-co-located Rule (referred to as the 536 Rule) – Limits Medicare admissions to 25% to 50% (depending on circumstances) from a non-Host facility when the LTCH is an HIH.

16. Regulatory Guidelines 5% Return to Host Rule

17. Regulatory Guidelines 3 and 10 day “interrupted stay” rules • LTAC assumes costs of patients that do not return within 3 days • LTAC must discharge a patient that has not returned within 10 days. Can affect 25 day Length of Stay (LOS).

18. Regulatory Guidelines Medicare 25 Day LOS Rule • Traditional Medicare • Medicare Advantage Patients – Included in the LOS calculation for cost reporting periods beginning on or after January 1, 2012.

19. Regulatory Guidelines Admission Criteria • Examples are Interqual and Milliman. However, Select has worked with Medicare to create our own LTAC criteria tool. • New admission criteria signed into law last December takes effect the cost year after 10/1/15. (will discuss under regulatory section.)

20. Regulatory Guidelines Reimbursement • LTAC DRG, concurrent coding for Medicare patients. • Insurance – contractual • Medicaid – percentage of charges.

21. Regulatory Guidelines Joint Commission • Accredited the same way as larger, short term acute care hospitals. • Visit every 3 years and information submitted in other years.

22. Nature of symbiotic relationship between general hospital (Short-Term Acute Care) and a Hospital-Within-a-Hospital (HIH) • - Lease Agreements • - HIH becomes Tenant. • - Purchase Service Agreements • - HIH needs services for patients and purchases them from “Host” for patient. • - Benefit to patients and families • - One hospital provides all services. Physician continuity from Host is maintained in HIH.

23. Nature of Our Relationship with Skilled Nursing Facilities (SNFs) We work together to assist Short Term Acute Care Hospital with readmit measure. (Penalties involved here). The sequence is generally STACH LTACH SNF for our type of patient (Chronically Critically Ill). However, if patients become too acute then LTACH physicians can admit directly from SNF.

24. The Future of the Long-Term Acute Care Hospital • Last year the U.S. Congress passed H.J. Resolution 59 on • Dec. 26, 2013 which included: • -New LTACH Quality Measure. • -Non-vent patients must have a 3 day ICU stayprior to LTACH admit. • Moratorium on new LTACH beds, satellites, or hospitals • starting 1/1/15. • 25% rule– 4 yr relief on 25% rule for free standings and • 50% rule for HIH’s.

25. Thank you for the opportunity to offer this presentation. Questions?